Jonathan Manthorpe: Year of the Snake offers China financial success in challenging times

Jonathan Manthorpe, Vancouver Sun columnist02.08.2013

Chinese actors dressed as Qing Dynasty servants take part in a rehearsal of ancient Qing Dynasty ceremony for the upcoming Chinese New Year at Ditan Park in Beijing on Friday. Chinese will celebrate the Lunar New Year on Feb. 10 this year which marks the Year of Snake.Andy Wong
/ AP

A Chinese actor dressed as Qing Dynasty emperor, center, sits on a sedan chair during a rehearsal of an ancient Qing Dynasty ceremony ahead of the upcoming Chinese New Year at Ditan Park in Beijing Friday, Feb. 8, 2013. Chinese will celebrate the Lunar New Year on Feb. 10 this year which marks the Year of Snake.Andy Wong
/ AP Photo

FILE - In this Jan. 18, 2013 file photo, an assistant shop clerk works near a newly unveiled gold snake on display for sale ahead of the upcoming Chinese lunar new year, the year of the Snake, at a jewelry shop in Hong Kong. The 380 gram-gold snake is for sale at HK$200,000 (US$25,800). Chinese New Year remains the most important festival in the region, a weeklong round of family reunions, temple visits, and gastronomic excess. (AP Photo/Kin Cheung, File)

The Venetian in Las Vegas shows a Chinese New Year art installation welcoming the year of the snake. The associated pressAudrey Dempsey
/ AP

Chinese New Year decorations are displayed in a shopping mall in Hong Kong Monday, Feb. 4, 2013, to celebrate the Year of the Snake as the Chinese Lunar New Year starts on Feb. 10.Vincent Yu
/ AP

A woman poses beside some Chinese New Year decorations inside a shopping mall in Hong Kong Monday, Feb. 4, 2013, to celebrate the Year of the Snake as the Chinese Lunar New Year starts on Feb. 10.Vincent Yu
/ AP

A Cambodian man looks at Chinese Lunar New Year lanterns at a shop in Phnom Penh on February 8, 2013. The Chinese Lunar New Year, the most important of the traditional Chinese holidays will be celebrated from February 10 to 12.TANG CHHIN SOTHY
/ AFP/Getty Images

A performer plays to the crowd during a dragon dance to celebrate Chinese Lunar New Year of the Snake in China town in Manila on February 8, 2013. The Chinese Lunar New Year of the Snake will be celebrated on February 10.TED ALJIBE
/ AFP/Getty Images

This picture taken on February 7, 2013 shows people buying Lunar New Year decorations with the word for luck, in Chinese “Fu” in a market in Zouping, east China’s Shandong province. The Lunar New Year, or spring festival, falls on February 10.STR
/ AFP/Getty Images

People browse Chinese Lunar New Year of the Snake ornaments in China town in Manila on February 8, 2013. The Chinese Lunar New Year of the Snake will be celebrated on February 10.TED ALJIBE
/ AFP/Getty Images

A lady poses for a photograph with the ‘God of Fortune’ at the 2013 River Hongbao Festival at The Float at Marina Bay on February 8, 2013 in Singapore. This annual event is an integral part of Singapore’s Chinese New Year celebrations and showcases larger-than-life lantern displays (designed locally and handcrafted by China craftsmen), intricate handicrafts, and crowd pleasing local delights and foreign delicacies from Guangdong at the largest outdoor Food Street in Singapore, as well as a myriad of other activities.Suhaimi Abdullah
/ Getty Images

A woman walks through a sidewalk market selling goods for Chinese Lunar New Year in the Indonesian capital city of Jakarta on February 8, 2013 as the Muslim majority country’s minority Chinese-Indonesians prepares to celebrate the Chinese Lunar New Year. The “Year of the Snake” falls across the region on February 10, 2013.ROMEO GACAD
/ AFP/Getty Images

In this photo taken on Wednesday, Jan. 9, 2013, Director of the Temple of White Snakes Lo Chin-shih holds a genetically modified, auspicious, white snake as he talks about its significance in the upcoming Chinese Lunar New Year of the snake according to the lunar zodiac calendar in Taoyuan county, in north western Taiwan. Lo said the new year of the snake would be a time of steady progress, in contrast to the more turbulent nature of the outgoing year of the dragon. The Chinese New Year falls on Feb. 10.Wally Santana
/ AP

A diver dressed as a mermaid (R) and Chinese deity of prosperity (L) performs next to a Chinese Lunar New Year of the water snake greeting inside an aquarium at Manila ocean park on February 8, 2013. The show is part of the park’s celebration of the Chinese Lunar New Year, which falls on February 10.TED ALJIBE
/ AFP/Getty Images

A couple pose for a photograph inside a Prosperity Pineapples lantern display at the 2013 River Hongbao Festival at The Float at Marina Bay on February 8, 2013 in Singapore. This annual event is an integral part of Singapore’s Chinese New Year celebrations and showcases larger-than-life lantern displays (designed locally and handcrafted by China craftsmen), intricate handicrafts, and crowd pleasing local delights and foreign delicacies from Guangdong at the largest outdoor Food Street in Singapore, as well as a myriad of other activities.Suhaimi Abdullah
/ Getty Images

Performers take part in a dragon dance to celebrate Chinese Lunar New Year of the Snake in China town in Manila on February 8, 2013. The Chinese Lunar New Year of the Snake will be celebrated on February 10.TED ALJIBE
/ AFP/Getty Images

A worker pulls a trolley loaded with boxes of glutinous rice food, local known as “tikoy” and popular during Chinese Lunar New Year, in China town in Manila on February 8, 2013. The Chinese Lunar New Year of the Snake will be celebrated on February 10.TED ALJIBE
/ AFP/Getty Images

A performer is reflected in the glass window of a car during a dragon dance to celebrate Chinese Lunar New Year of the Snake in China town in Manila on February 8, 2013. The Chinese Lunar New Year of the Snake will be celebrated on February 10.TED ALJIBE
/ AFP/Getty Images

Visitors looks at a display celebrating the Lunar New Year in Shanghai on February 8, 2013. Preparations continue in China for the Lunar New Year which will celebrate the Year of the Snake on February 10.PETER PARKS
/ AFP/Getty Images

A woman sells Chinese Lunar New Year of the Snake ornaments in China town in Manila on February 8, 2013. The Chinese Lunar New Year of the Snake will be celebrated on February 10.TED ALJIBE
/ AFP/Getty Images

A lady walks past a ‘Lunar New Year is Here!’ lantern display at the 2013 River Hongbao Festival at The Float at Marina Bay on February 8, 2013 in Singapore. This annual event is an integral part of Singapore’s Chinese New Year celebrations and showcases larger-than-life lantern displays (designed locally and handcrafted by China craftsmen), intricate handicrafts, and crowd pleasing local delights and foreign delicacies from Guangdong at the largest outdoor Food Street in Singapore, as well as a myriad of other activities.Suhaimi Abdullah
/ Getty Images

A family walks past a lantern display with giant balloons in hands at the 2013 River Hongbao Festival at The Float at Marina Bay on February 8, 2013 in Singapore. This annual event is an integral part of Singapore’s Chinese New Year celebrations and showcases larger-than-life lantern displays (designed locally and handcrafted by China craftsmen), intricate handicrafts, and crowd pleasing local delights and foreign delicacies from Guangdong at the largest outdoor Food Street in Singapore, as well as a myriad of other activities.Suhaimi Abdullah
/ Getty Images

People view the lantern display at the 2013 River Hongbao Festival at The Float at Marina Bay on February 8, 2013 in Singapore. This annual event is an integral part of Singapore’s Chinese New Year celebrations and showcases larger-than-life lantern displays (designed locally and handcrafted by China craftsmen), intricate handicrafts, and crowd pleasing local delights and foreign delicacies from Guangdong at the largest outdoor Food Street in Singapore, as well as a myriad of other activities.Suhaimi Abdullah
/ Getty Images

A customer looks at Chinese Lunar New Year merchandise at a shop in Shanghai on February 8, 2013. Preparations continue in China for the Lunar New Year which will celebrate the Year of the Snake on February 10.PETER PARKS
/ AFP/Getty Images

A diver dressed as a mermaid (R) and Chinese deity of prosperity (L) performs next to a Chinese Lunar New Year of the water snake greeting inside an aquarium at Manila ocean park on February 8, 2013. The show is part of the park’s celebration of the Chinese Lunar New Year, which falls on February 10.TED ALJIBE
/ AFP/Getty Images

A woman walks past Chinese lantern decorations ahead of the Chinese Lunar New Year at a shopping mall in Kuala Lumpur, Malaysia, Monday, Feb. 4, 2013. The Lunar New Year begins on Feb. 10 and marks the start of the Year of Snake, according to the Chinese zodiac.Vincent Thian
/ AP

A Brazilian in costume takes part in the Chinese Lunar New Year celebrations at Liberdade district in Sao Paulo, Brazil, on February 2, 2013. The Chinese Lunar New Year’s day will be February 10 as the year of snake in Chinese zodiac calendar.YASUYOSHI CHIBA
/ AFP/Getty Images

Chinese New Year decorations are displayed on a window at a shopping mall in Hong Kong Sunday, Feb. 3, 2013, to celebrate the Year of the Snake as the Chinese Lunar New Year starts on Feb. 10.Vincent Yu
/ AP

The dragon dance is performed during the Chinese Lunar New Year celebrations at Liberdade district in Sao Paulo, Brazil, on February 2, 2013. The Chinese Lunar New Year’s day will be February 10 as the year of snake in Chinese zodiac calendar.YASUYOSHI CHIBA
/ AFP/Getty Images

Schoolchildren react to a diver (R) dressed as the God of Fortune in an aquarium at Underwater World Singapore on Sentosa’s Island resort on February 5, 2013. The Chinese celebrate the Lunar New Year of the snake on February 10.ROSLAN RAHMAN
/ AFP/Getty Images

A vendor sells Chinese New Year decorations at a market in Hong Kong’s Victoria Park Tuesday, Feb. 5, 2013, to celebrate the Year of the Snake as the Chinese Lunar New Year starts on Feb. 10.Vincent Yu
/ AP

A woman holds flowers at a New Year market in Hong Kong’s Victoria Park Tuesday, Feb. 5, 2013, to celebrate the Year of the Snake as the Chinese Lunar New Year starts on Feb. 10.Vincent Yu
/ AP

A vendor sells Chinese New Year decorations at a market in Hong Kong’s Victoria Park Tuesday, Feb. 5, 2013, to celebrate the Year of the Snake as the Chinese Lunar New Year starts on Feb. 10.Vincent Yu
/ AP

A vendor sells Chinese New Year decorations at a market in Hong Kong’s Victoria Park Tuesday, Feb. 5, 2013, to celebrate the Year of the Snake as the Chinese Lunar New Year starts on Feb. 10.Vincent Yu
/ AP

Traditional dancing is part of the celebrations marking the Year of the Snake at the Calgary Chinese Cultural Centre.Stuart Gradon
/ Calgary Herald

Chinese Malaysian man walks Wednesday by Thean Hock Keong temple, also known as Snake Temple, in Klang, outside Kuala Lumpur, Malaysia. Chinese Lunar New Year begins Feb. 10 and marks start of Year of Snake, according to Chinese zodiac.Lai Seng Sin
/ AP

In this photo taken on Wednesday, Jan. 9, 2013, ahead of the Chinese lunar new year of the Snake, following the Chinese zodiac, elderly devotees handle genetically modified, auspicious, white snakes on the altar at the Temple of White Snakes in Taoyuan county, in north western Taiwan. Director of the temple Lo Chin-shih said the new year of the snake would be a time of steady progress, in contrast to the more turbulent nature of the outgoing year of the dragon. The Chinese new year fall on Feb. 10. (AP Photo/Wally Santana)

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A commendable spirit of optimism infuses the Chinese view of the dozen animals symbolizing the 12 years of the calendar cycle so that even the incoming Year of the Snake arrives brimming with prospects of good fortune.

In western culture the snake is a symbol of deceit, loss of innocence and death.

Not so in China and the other Asian countries that follow the Chinese calendar.

The arrival of the snake, whose year begins on February 10, portends 12 months of good business and sound finances.

But the snake is also an enigmatic character, subtle, refined and intuitive.

That is perhaps a healthy state of mind for China as it confronts a more than usually uncertain future both at home and abroad, and under the guidance of a new leadership.

Xi Jinping was selected the new head of the Communist party at the 18th Party Congress in November last year.

His assumption of full leadership will be complete, probably in March, when he is chosen President of China by the National People’s Congress.

His prime minister — Premier as he is called in China — will be Li Keqiang, Xi’s deputy in the leadership of the Communist party and a vice-president of China until his elevation.

These men — and the fifth generation of senior officials since the communists seized power in 1949 that they lead — face unprecedented challenges stemming largely from China’s extraordinary success after the abandonment of Marxist economics over 30 years ago.

Because of China’s huge success, the structure of its economy — now the world’s second largest, its internal political system, and its performance as a looming regional and perhaps global superpower have either outlived their usefulness or face serious challenges.

Thus, the Year of the Snake is opening a decade under the new leadership when China must embrace fundamental change or face losing the huge advances it has made since former paramount leader Deng Xiaoping launched the shift to a form of free market economy in the late 1980s.

As always when a new generation of Chinese leaders takes the helm there is a torrent of speculation that perhaps this will be the cohort that brings in real political reform, an end to one-party rule, introduction of the true rule of law, and some form of representative and accountable government.

From what Xi has said and his history as the “princeling” son of a Communist party revolutionary leader and hero there is no particular reason to think he will be an agent of dramatic change.

But his identification of corruption among Communist party officials as one of the greatest challenges of his administration says that he understands a large part of the problem, if not yet that ultimately only radical political reform will deal with it.

Despite some improvements, income disparity between rich and poor remains at socially destabilizing levels. The richest 10 per cent of China’s 1.3 billion people earn on average about 65 times the income of the poorest 10 per cent, and urban dwellers earn about 3.5 times that of their rural counterparts.

The economic reforms have yet to touch the lives of about 400 million rural people, whose lives have actually worsened since the end of the Communist social security “iron rice bowl” and their loss of free education and health care.

Meanwhile the opportunities for local Communist party and government officials — and their relatives and friends — to make money provide a host of temptations.

Most of these involve defrauding or otherwise abusing local people through theft of their land, their jobs, their pensions or their health through unfettered polluting industries.

This has spurred a seething flow of discontent. The latest official figures that have become known from 2011 say there were about 180,000 “mass incidents” of unrest that year.

This means there were on average 493 riots or other serious outbreaks of public disorder every day.

Translated into Canadian terms, that’s 13 Stanley Cup riots across the country every day.

Even though this shows a very serious underlying social instability that is not sustainable in the long term, for the moment the Communist party is able to contain it because it retains a monopoly on power and does not allow the formation of any opposition that might give national focus to this discontent.

This sense of foreboding, that change — perhaps traumatic change — looms in the near future is starkly evident in the amount of money China’s wealthy are managing to get out of the country.

One estimate by an American anti-money laundering institute, Global Financial Integrity, is that up to $472 billion fled China last year. The Wall Street Journal puts the outflow at a more modest $225 billion in the 12 months to the end of last September.

In either case, these sums vastly overshadow the official figure of $117 billion in foreign direct investment in China last year.

Uncertainty at home is matched by even sharper discord with some of China’s neighbours.

China’s rising stature in the world and a couple of decades of investment in a modern, professional military has bred a strain of intense nationalism among many Chinese and a growing desire to protect the nation’s honour and interests among the various branches of the People’s Liberation Army (PLA).

The prospects of conflict are especially sharp with the old enemy, Japan.

Bullish feelings among China’s nationalists and in the PLA over Chinese claims to ownership of the Japanese-administered Senkaku Islands in the East China Sea have led to dangerous confrontations.

Chinese maritime surveillance vessels and war planes and Japanese fighter aircraft and Coast Guard cutters are now regularly encountering each other in Japanese territorial waters and airspace.

Meanwhile senior Chinese generals regularly make bellicose public statements warning the Japanese of war.

This is a situation where mistakes are easily made.

China has an equally dangerously poised relationship with its neighbours in the South China Sea, Vietnam and the Philippines.

Beijing claims almost the whole sea right down to Indonesia as its territory and regularly sends vessels to confront Vietnamese and Philippines’ efforts to harvest resources in their exclusive economic zones and territorial waters.

China’s claim to suzerainty over the South China Sea is but one of Beijing’s quests that has alarmed Washington because the sea carries some of the world’s busiest trade routes.

Elsewhere China’s emergence on the world stage is less contentious, though not always without controversy.

The hunt by Beijing and China’s massive state-owned conglomerates for secure access to supplies of raw materials as well as markets for manufactured goods has led to a massive investment offensive into Africa and Latin America.

By and large the Chinese investments have been welcomed because they come without the criticism of domestic civic rights regimes that often limit western investment, and Beijing often throws large infrastructure projects into the mix as a loss leader or heavily subsidized tempting treat.

But in Africa in particular there has been some local outrage at the habit of Chinese companies to import labour from home rather than hire local people, and also at cheap imported Chinese products and retailers driving locals out of the market.

China’s economy begins the New Year with the blessing of the money-magnet snake.

Official figures published mid-January say the economy grew by a healthy 7.8 per cent in 2012.

This is below the average 10.6 per cent annual growth rates from 2002, but at this stage in China’s economic development a slightly slower and steadier advance is probably healthier than the soar-away numbers of the last 30 years.

If this growth rate is accurate — and it remains an act of wisdom to be skeptical about any economic numbers emanating from Beijing – China is likely to avoid any double or triple dip in the recession hitting Europe and North America since 2009.

However, while the Beijing bureaucracy undoubtedly puts out gross national product figures like these in good faith, it is not evident that the data supplied by regional and local officials are trustworthy.

Last month, for example, the Customs Bureau in Beijing announced that in December exports had risen 14.1 per cent from a year earlier, a huge jump over the 2.9 per cent rise reported in November and a big leap over economists’ expectations of a rise of about five per cent.

Well, a closer look at export and import traffic suggests local authorities may have been moving goods in and out of special economic zones to create a mirage of trade activity.

And an apparent leap in the export of semiconductors — a bellwether for the vibrancy of China’s electronics manufacturing industries — may not have been as it seemed.

It transpires that the Chinese customs authorities recently bundled many electronic components not usually associated with semiconductors into the semiconductor category, thus inflating the high-tech and whole export numbers.

As the government and the central People’s Bank of China have tried to regulate and stabilize the financial system, lending quotas and controlled interest rates have encouraged local banks to create a large shadow banking system that ignores the government’s regulations.

There is, however, a more fundamental challenge with reshaping the Chinese economy that leaders have been grappling with for a decade with mixed success.

China’s economy has reached a stage of maturity where domestic consumption, at 35 per cent of gross domestic product, is finally outstripping export revenue at 25 per cent.

But this is still paltry when compared with the U.S., where 71 per cent of the economy is domestic consumption and Europe where it is 57 per cent.

And Chinese households continue to be the world’s largest savers, sorting 38 per cent of their incomes away for a rainy day.

And that too is a measure of the uncertainty felt by ordinary Chinese people as they contemplate a new year and a new era.

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Jonathan Manthorpe: Year of the Snake offers China financial success in challenging times

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